The future is bright for First National Bank of Shelby County, bank officials say.

The bank’s board of directors recently approved an agreement to begin the process of a merger with First Merchants & Farmers Bank of Mississippi.

The announcement was made by Columbiana Bancshares chief executive Craig Nelson and First M&F Corporation chairman Hugh S. Potts Jr. that First M&F would pay some $31 million for all outstanding shares of the bank.

&8220;I believe we get the best of both worlds,&8221; said FNBSC chief executive officer Craig Nelson.

&8220;(First M&F) is a bank with a community philosophy that will offer our employees greater management expertise and our customers more alternatives.&8221;

Nelson said the two banks are currently in the process of completing the acquisition.

&8220;This really is a process. Most people don’t understand that. Right now, the accountants and attorneys are preparing information that will be handed to our shareholders,&8221; he said. &8220;In about four to six weeks, our board of directors will make a recommendation to them and there will be a shareholders’ vote. Then, of course, there is regulatory approval. This is a thorough process.&8221;

Nelson said the process could take two to three months to complete.

In the meantime, however, he is encouraged by the local bank’s outlook for the future.

&8220;This area (Birmingham) has become a major banking center. This will allow us to compete more efficiently and productively,&8221; he said.

First M&F has some $1.2 to $1.3 billion in assets, while First National Bank of Shelby County’s assets number about $200 million.

&8220;They’re in a small county in Mississippi and they’ve grown at a steady pace. They have a community bank philosophy that was attractive to our board of directors,&8221; Nelson said. &8220;This merger will bring a lot of resources – technology, investment alternatives. A lot that we’re unable to do now, because of our size, we will be able to do in the future.&8221;

The FNBSC acquisition is the Kosciusko, Miss., bank’s first venture into Alabama.

Potts expressed his excitement about the expansion into Alabama and another in Tennessee on the company’s website.

&8220;Each of these transactions builds on our plan to offer relationship banking to growing communities in Tennessee and Alabama built upon integrity, service and stewardship,&8221; Potts said.

Changes

As to changes at the local bank, Nelson said there would surely be some, the largest of which he expressed excitement about.

&8220;The biggest change is that we’ll be able to offer more and serve our community better,&8221; he said.

&8220;No firm decision has been made regarding a head-count issue. Some of the jobs will be changing. That will be the biggest impact on our employees,&8221; Nelson said. &8220;With the different technology that will be available, some of the jobs will be changing.&8221;

He said FNB employees have reacted well to the changes afoot at the bank.

&8220;There’s a certain level of excitement in re-training and re-focusing. M&F has been very reassuring, very approachable,&8221; Nelson said.

&8220;Generally, there’s a sense of excitement. We’ll be able to take our heritage and look to a bright future.&8221;

FNB currently operates a main office in Columbiana and branches in Wilsonville, Chelsea, Inverness, Riverchase and Pelham.

Nelson said he does not expect any of the branches to be closed.

&8220;My expectation is, as (M&F) gets into it, they’ll probably open more of them (branches),&8221; he said. &8220;Shelby County has a vibrant, growing economy. It’s a very healthy business community.&8221;

One difference Shelby County residents may have to get used to is a name change, but Nelson said that probably will not happen for a while.

OCC regulations

The merger with First M&F Corporation will most likely take care of many of the concerns expressed earlier in the year by the Office of the Comptroller of the Currency, Nelson said.

First National’s board of directors, led at the time by chairman William T. Harrison and his sisters, Helen H. Phillips and Carol H. Smith, signed an agreement with the OCC in May that stated substantial changes would be made at the bank in order to come into compliance with regulations.

The Harrison family owns 50.4 percent of the bank’s shares.

The OCC had charged the bank &8220;with violations of law, rule or regulation, with unsafe or unsound banking practices&8221; and with failure to comply with certain oversight measures set forth in a former agreement.

Since that agreement was signed in May, Harrison, Phillips and Smith have resigned from the bank’s board. The board currently consists of Nelson, Hewitt &8220;Sonny&8221; Conwill, Martha B. Ferguson, Dr. Thomas J. Parliament, Joe L. Tidmore Sr. and Betty Horton.

Other changes have been made at the bank as well.

But, Nelson said, the acquisition by First M&F will take care of many of the OCC’s concerns.

First M&F has also made accommodations for several lawsuits the local bank has pending. The company set aside $2.5 million in escrow to await resolutions of those conflicts.

The history

First National Bank of Shelby County was established by Gordon Dubose in 1892. Dubose operated out of his law office in the Shelby County Courthouse.

The first bank building was constructed in 1894 in Columbiana.

The bank was sold to Melvin Dyke in 1903 at about the same time as another bank was established in town, Columbiana Savings Bank, organized by W.B. Browne, W.L. Farley, J.I. Leeper and John Robertson.

The two banks merged in 1904 and continued operating at Columbiana Savings Bank, incorporating under that name in 1905 with Browne as president until 1911. W.F. Davis took over as president in 1911 and W.L. Christian in 1940.

In 1947, Columbiana Savings Bank received a national charter and the bank was renamed First National Bank of Columbiana.

In 1949, Ehney Camp became the fourth president with J.I. Harrison taking over in 1951. During that same year, Karl C. Harrison and Rufus M. Lackey became affiliated with the bank as majority stockholders and directors.

In 1980, Karl C. Harrison became president and in 1992, his son, William T. Harrison Sr. took over. Karl C. Harrison became chief executive officer and chairman of the board.

Harrison died at age 89 in 1997 and his son took over as CEO and board chairman. His daughter, Helen H. Phillips became president.

The name of the bank changed to First National Bank of Shelby County in 1996